Davíð Oddsson (pronounced [ˈtaːvið ˈɔtsɔn]; 17 January 1948 – 1 March 2026) was an Icelandic politician, and the longest-serving prime minister of Iceland, in office from 1991 to 2004. From 2004 to 2005, he served as foreign minister and as the chairman for the Independence Party from 1991 to 2005. Previously, he was Mayor of Reykjavík from 1982 to 1991, and chaired the board of governors of the Central Bank of Iceland from 2005 to 2009. The 2008–2011 Icelandic financial crisis led to vocal demands for his resignation, both from members of the Icelandic public and from the new Icelandic Prime Minister Jóhanna Sigurðardóttir, which resulted in his being replaced as head of the Central Bank in March 2009.
In September 2009, he was hired as the editor of Morgunblaðið, one of Iceland's largest newspapers, a decision that caused nationwide controversy and was followed by resignations and widespread terminated subscriptions. He contested the election for President of Iceland on 25 June 2016 but lost to Guðni Jóhannesson, coming in fourth place with 13.7% of the popular vote.
Davíð was one of the most popular and successful politicians in Icelandic history but was also highly controversial for his support for the Iraq War and for his part in the 2008 financial crisis. Time named Davíð as one of the 25 people the most to blame for the crisis worldwide.
Davíð Oddsson was born in Reykjavík on 17 January 1948. His father was a doctor, and his mother a secretary. His parents were not married, and he was brought up in his maternal grandfather's home in Selfoss until his grandfather died. He then moved with his mother and grandmother to Reykjavík.
He took an early interest in acting, and attended an acting school for a while. He also attended the gymnasium Menntaskólinn í Reykjavík where he graduated in the spring of 1970. Davíð married Ástríður Thorarensen, a nurse; they have one son, Þorsteinn, who is a judge at the district court at Akureyri. The next six years, Davíð read law at the University of Iceland, working almost full-time as well. He was assistant to the director of a small theatre (now the Borgarleikhúsið) for a while, and with two friends (Þórarinn Eldjárn and Hrafn Gunnlaugsson), he produced a popular radio comedy show for two years; he was for a while a political commentator at the newspaper Morgunblaðið, and the director of publication of Almenna bókafélagið, a conservative publishing house. He had been elected to the Municipal Council in Reykjavík in 1974, for the Independence Party.
Mayor of Reykjavík (1982–1991)
Davíð Oddsson was a member of a group of young conservative-libertarians within the Independence Party who felt that the party should more strongly support attempts to extend economic freedom in the heavily regulated Icelandic economy. The group included Þorsteinn Pálsson, Geir H. Haarde, Jón Steinar Gunnlaugsson, Kjartan Gunnarsson, Magnús Gunnarsson, Brynjólfur Bjarnason and Hannes Hólmsteinn Gissurarson, and they published the magazine Eimreiðin from 1972 to 1975; they also followed with interest what was happening in the United Kingdom under Margaret Thatcher and in the United States under Ronald Reagan; they also read books and articles by and about Milton Friedman, Friedrich Hayek and James M. Buchanan, who all visited Iceland in the early 1980s and whose messages of limited governments, privatisation, and liberalisation of the economy had a wide impact.
Davíð got a chance to further his ideals when, in 1982, the Independence Party, under his leadership, regained the majority in the Reykjavík Municipal Council which it had lost four years earlier to three left-wing parties. Davíð swiftly reduced the number of Council members from 21 to 15, and merged the largest fishing firm in Reykjavík, which belonged to the municipality and had been a huge burden, with a private fishing firm and then sold off the municipality's assets in the new firm, Grandi, which became one of the biggest fishing firms in Iceland. Incidentally, the director of Grandi, Brynjólfur Bjarnason, later became the director of the Icelandic Telephone Company which turned out to be Davíð's last privatisation in government (2005). As Mayor of Reykjavík, Davíð was behind the building of Reykjavík City Hall by Tjörnin in Reykjavík, and of Perlan, a natural history museum with a revolving restaurant, built atop the district hot water tanks in Öskjuhlíð. Despite his libertarian leanings, Davíð also supported the Reykjavík City Theatre, in particular the building of a new theatre house which was opened in 1989. In the nine years when Davíð was Mayor of Reykjavík, a new district, Grafarvogur, was built and a new shopping area around the Kringlan shopping mall. A forceful and uncompromising Mayor of Reykjavík, Davíð was much criticized by the left-wing opposition in the Municipal Council.
Alliance with the Social Democrats (1991–1995)
In 1983, Davíð Oddsson's old friend and ally, Þorsteinn Pálsson, was elected leader of the Independence Party, and in 1989 Davíð was elected deputy leader or Vice-Chairman of the party. After Þorsteinn resigned as prime minister in 1988, after falling out with the leaders of his two coalition parties, there was a widespread feeling in the party that its leadership should be changed, and pressure was put on Davíð to run against Þorsteinn, which he did in 1991, becoming leader of the party. Under Davíð's leadership, in 1991, the party regained most of the parliamentary support it had lost in 1987. In record time, Davíð formed a coalition government with the social democrats, Alþýðuflokkurinn, whose leader, Jón Baldvin Hannibalsson, became Minister of Foreign Affairs. Jón Baldvin and Davíð jointly decided that Iceland should become the first state to renew recognition of the sovereignty and independence of the three Baltic countries, Estonia, Latvia and Lithuania, prior to the collapse of the Soviet Union.
Davíð's government inherited a huge budget deficit and a number of unproductive investments: much money had been spent on fish farming for example, with little result. Inflationary pressures were also building, while some fish stocks in Icelandic waters were being depleted. The budget deficit was turned into a surplus in 1996, not least because of the close cooperation between Davíð and Friðrik Sophusson, the Minister of Finance, who had also been a prominent young libertarian. There has been a surplus almost continuously since then, which was used to reduce the public debt, and also to reform the pension system, which is now almost wholly self-supporting. Some small companies were privatised. Monetary constraints were imposed by making the Central Bank largely independent of any political pressures. It also helped the Davíð Oddsson government that there was a consensus between the labour unions and the employers that the rampant inflation of the 1980s, with huge, but largely meaningless, wage increases, could not go on; therefore, in 1990, the unions and the employers had signed a "National Accord", whereby wage increases would be moderate, and government would be assisted in bringing down inflation. From 1991, inflation in Iceland was on a level with neighbouring countries.
Alliance with the Progressive Party (1995–1999)
In 1994, the Social Democratic Party split, and as a result they suffered a huge loss in the 1995 parliamentary elections. The coalition government maintained its majority, but only by one seat. Davíð Oddsson therefore decided to form a coalition with the Progressive Party, whose leader, Halldór Ásgrímsson, became Minister of Foreign Affairs. In the new government, privatisation was continued on a much greater scale than before: a large and important chain of fish processing plants was sold; part-public or public investment funds were merged and sold as a private investment bank; the two commercial banks under government control were sold in a few stages; the two coalition parties accepted the loud demands from many people for a charge to be imposed on the holders of fishing quotas.